5 Key Figures to Know Before Buying a Home
Faced with rising interest rates and tighter bank lending, the real estate market is grinding to a halt. Here are five key figures that summarize the challenges facing prospective homebuyers.
90% of first-time homebuyers can purchase a 50-square-meter home
To perform this calculation, the data science team at Meilleurs Agents created a typical profile of first-time homebuyers in France. This profile is that of a 34-year-old couple with no children who wants to buy a 50-square-meter apartment. They have a down payment of €60,000 and are taking out a 25-year mortgage. Based on this scenario and a metric we’re all familiar with by now—the debt-to-income ratio (yes, that one again)—our analysts concluded that 90% of first-time homebuyers could still afford a 50 m² apartment in 99% of French municipalities. And this is despite complicated mortgage approval conditions. However, the Paris metropolitan area, the coast, and the ski resorts of Savoie remain areas that are difficult for first-time homebuyers to access.
It takes 12 years to recoup the cost of buying a 50 m2 property
For first-time homebuyers, buying a 50 m² home becomes more financially advantageous than renting (for an equivalent property) after nearly… 12 years (11 years and 8 months, to be precise). That timeframe has increased eightfold in just two years! The reason, of course, is interest rates, which have skyrocketed over that same period, rising from 1% back then to nearly 4% today. “But we know that first-time homebuyers stay in their homes for an average of 7 years,” adds Thomas Lefebvre, a data analyst at Meilleurs Agents. “After that, the home no longer meets the family’s needs.”
30% off the retail price
If the average time a property is held is 7 years, it’s worth knowing whether there are still cities where a purchase can pay for itself in less than seven years. According to data from Meilleurs Agents, this is the case in 22% of French cities, from the far east to the central regions. And these aren’t the most attractive cities for young couples. In fact, only 11% of first-time homebuyers live in these towns. To shorten this payback period, there are two options: negotiate the sale price down by 30%, or double your down payment.
92% of cities are accessible to first-time homebuyers
What is the typical profile of second-time homebuyers? A 41-year-old couple with two young children. This family has a larger down payment (€100,000), takes out a 20-year mortgage, and wants to buy a 120 m² home. For them, the outlook seems brighter, since they can buy in 92% of cities. These are predominantly attractive cities, as 67% of them live there. Furthermore, the payback period for their purchase is not much longer than for first-time homebuyers: 12 years and 1 month on average. This aligns well with their life plan: a home where they envision their family living for years to come.
Given the current environment of high prices and interest rates, the real estate market is therefore primarily driven by repeat homebuyers.
890,000 transactions this year
According to the latest studies, the French real estate market is not expected to exceed 890,000 transactions this year. This represents a 20% decline compared to 2022. The rental market is under strain, with a 18% drop in supply since January 2022 and an acceleration in the rise of rents.
